ETF rivalry heats up between BlackRock, Vanguard and others

Torsten Asmus

The ETF sector has experienced a big shakeup since the start of the pandemic as an increasing amount of funds and providers flood the industry. Charles Schwab (SCHW), Fidelity, Invesco (IVZ) and State Street (STT) are all jostling for position, as well as others like ARK Invest that are attempting to disrupt the space and beat the market. It comes amid a long-running battle over cheaper ETF fees, as well as the ever-growing suite of products and investing angles.

Top dogs: BlackRock (BLK) and Vanguard rule more than 60% of a U.S. ETF market, which has expanded by nearly fivefold to $6.6T from $1.35T a decade ago, but the rivalry has grown more intense in recent years. Since the start of 2020, Vanguard has recorded inflows of around $656B vs. the $411B of BlackRock’s iShares ETF unit (which it bought from Barclays in 2009). While BlackRock (BLK) markets a broader range of ETFs and targets bigger institutional investors, Vanguard has emphasized its standing as a low cost provider to attract retail investors and financial advisors.

“We are playing a different game. We want to lead, but it is also about expanding ETF usage across all client types. That’s more important,” said Armando Senra, Head of iShares Americas. “We are continually looking at expanding the offering, but we will be very judicious,” added Vanguard’s Dan Reyes. “We tend to stay away from thematic or narrowly sliced versions of the universe.”

Who will win? BlackRock’s (BLK) iShares Core U.S. Aggregate Bond ETF (AGG) is close to being surpassed by the Vanguard Total Bond Market ETF (BND) as the world’s largest bond exchange traded fund. However, Blackrock still has $2.96T in global ETF assets, compared to $2.04T for Vanguard at end of July, though the latter is catching up. Meanwhile, the largest ETF by assets is State Street’s (STT) SPDR S&P 500 Trust (SPY), but BlackRock (BLK) and Vanguard still dominate the next 15 out of 16 rankings.

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